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Independent evaluation of Ginger Oil’s P2-reservs

An independent evaluation of Ginger Oil’s P2 reserves has been done during January 2010 by Ralph E Davies & Associates. The evaluation shows that the proved reserves are 311 141 barrels oil equivalent (boe) and probable reserves are 13 908 635 boe.

Every year an audit of reserves has been done by an external consultant. This year a completely independent evaluation has been done. The evaluation has been done by Ralph E Davis Associates, Houston, Texas. The reserves reflect the situation at exactly 1/1/2010 and comprise Ginger Oil’s oil and gas reserves in Arkansas, Louisiana, Michigan and Texas.

The change in proved reserves during last year is due to divestment of reserves (-79 000 barrels), production during the year (- 27.000 barrels), identified new reserves (+50.000 barrels) and reevaluation (-12 000 barrels). Four wells in the 2009 drilling program were completed very late in the year and have not been included in the 1/1/2010 evaluation. These wells will preliminarily add 120 000 barrels proved and 5 000 barrels probable reserves.

The change in probable reserves during last year is due to divestment of a partial interest in Willisville, Arkansas, (-514 000 barrels) and in Jackson County, Texas (-90 000 barrels), reevaluating reserves in Arkansas (-1 500 000 barrels) and through a more conservative evaluation of Tiger Creek (-1 500 000 barrels).

”We are satisfied that the evaluation has confirmed that our probable reserves are stable. The evaluation shows, as well, that Tiger Creek, Louisiana has a great potential. The decline in proved reserves is due to the selling of producing reserves and that the result of the total 2009 drilling program is not included.” says Magnus Stuart, CEO Ginger Oil AB.

Carter #1 in Bandera Co. Texas has been flowing for one monthGinger Oil participated in a prospect in Bandera Co. Texas in the fall of 2007. Production from the well through a new pipeline started early January, and the well has now produced for one month. The production is stable within a range between 600 – 800 Mcfpd. After monitoring the production further, additional wells may be drilled. The reserves are estimated to be 1,360 MMcf. Ginger has a 7.7% net revenue interest.

“This well will flow on it’s own for several years before we put it on pump. We will start production from this well in a few days,” says Scott Robinson, Vice President Engineering, for Ginger Oil Inc.

Spudding of N.E. Clemens, Four Way Ranch #1, Jackson Co. Texas.The N.E. Clemens prospect is scheduled to begin drilling in March. This prospect is a look alike to the So. LaWard Field (above) and has the same four target zones as the previous three wells drilled in Jackson Co. The new prospect is located 4 miles northeast of So. LaWard Field and has an additional target, the Anomalina sand. The four, relatively lower risk zones have a potential of containing 1,400,000 bbls. The Anomalina, which is high risk, has a potential of 2,000,000 bbls. Ginger is operator and has 16.9 % net revenue interest.

Ginger Oil has drilled and is completing its “L Ranch D #3” well in the South LaWard field, Jackson Co. Texas. This well, the third drilled in this oil field, encountered four productive zones for a total of 57 feet of net oil pay. One of the zones has 18 feet of pay and is a new discovery. The other zones came in as expected.

This well is expected to accelerate the production from the field to 350 BOE per day, and increase the already booked reserves of 737,000 barrels of oil. Ginger has 8.1 % net revenue interest which translates to 28 BOE per day and reserves of 60 000 BOE. With the addition of the newly discovered zone these reserves will increase and will be disclosed after being properly assessed.

“This field, where Ginger is the operator, has been very successful for us. The third well has provided us with more knowledge and a new discovery that opens for an opportunity to drill a fourth well. The D#3 well should be on production within three weeks” says Don Neville, President, Ginger Oil Inc.

Ginger Oil AB is announcing a preliminary schedule of exploratory drilling and development of production from established fields during 2010. The objective with this plan is to increase the company’s mineral assets in oil and gas reserves, and to increase the company’s level of production capacity.

Exploratory DrillingGinger Oil plans to drill 10 to12 prospective wells in 2010. The first drilling was initiated on January 2, 2010. The drilling program reaches maximum level of activity during June-September. The company estimates that prospective drillings will result in the addition of established reserves of 4-6 million BOE, with a net of 700,000-800,000 BOE to Ginger Oil.

In Texas, the company plans exploratory drilling on Ginger Oil’s latest acquisition, the NE Clemens Prospect in Jackson County. The four week drilling activity is scheduled to start during the first half of February. The prospect has an estimated potential reserve of 3 million BOE, and Ginger Oil has a net revenue share of 20 %.

In Arkansas, the company plans to drill five exploratory wells in the Willisville area. Willisville is the latest addition to Ginger Oil 3-D seismic areas in Arkansas. Results from an initial exploratory well in July 2009 gave evidence for a more complex than expected geology. The company has reviewed the entire area and provided additional analysis with five newly defined prospects. The first prospect, Wedge#1, is scheduled to be drilled in May.

In the Falcon area, the company plans for two prospective wells. The first, which has been named Esters #1, has been started early January. The preliminary result is very positive. The company expects to make a public announcement revealing detail from testing within a short time.

In the Lewisville area and the Stephens area, the company plans three prospective wells. One prospective drilling in the Lewisville area is of particular interest. Through a review of available 3D seismic data, a possible reef formation has been identified. If the prospective well confirms the existence of the reef formation, it will be the first discovery of its kind in Arkansas. A reef formation may hold large quantities of oil, but Ginger Oil is cautious on probability, which has been estimated at 10 %.

During 2010, Ginger Oil plans to start drilling a series of test wells in the Tiger Creek prospect, Louisiana. Due to the prospect’s size, a minimum of three exploratory wells will be drilled before final conclusion of the overall potential of the prospect. Depending on final scheduling, all or part of the prospective drillings will be completed during 2010.

Development of Oil fieldsGinger Oil plans for the development of oil fields in Jackson County (Texas), in Lewisville (Arkansas) and in Barataria (Louisiana) with all seven development wells in proved producing reservoirs. These wells are expected to contribute to a gradually increasing production of oil and natural gas. The expected increases in total production are 700-800 BOE per day. From this, Ginger Oil has a net interest of 80-90 BOE per day.

The first development well to be drilled is located in Jackson County, South LaWard oil field, which was started on January 8th 2010. The well is expected to be completed during the second half of January.

Expected effects on Ginger Oil productionBased only of the successful addition of seven productive development wells, Ginger Oil is expected to double its average daily production compared with results from the fourth quarter 2010. Should the company maintain its historical probabilities when drilling all twelve prospective wells planned for 2010, Ginger Oil expects an additional 80-90 BOE daily production above the increase expected from the development wells.

Three high potential exploratory wells, Tiger Creek (Louisiana), NE Clemens (Texas) and Lewisville Reef (Arkansas) would, if leading to discoveries of productive oil fields, add further to production of oil and natural gas. More importantly, if successful, they will multifold the total asset value of Ginger Oil.

Drilling Program 2010 is subject to continuous review and rescheduling. Ginger Oil will communicate through press releases and through the quarterly reporting.

Ginger Oil has drilled eight wells in 2009. The result is encouraging with four new productive wells, three dry holes one productive well under testing, and three dry holes. In addition to this, a natural gas well in Texas Arch, (Carter #1) drilled in 2008, has been connected to pipeline and taken into production in early January 2010.

As announced on September 25th, the company then had drilled seven wells, and was expecting to drill additional five drills before year end. Out of the planned five additional wells, one well has been completed; the Soling Prospect in Arkansas in November. The remaining four wells have been postponed and will be included in the 2010 drilling program.

New wells are producing 45 bbl per day net to Ginger Oil. With present oil price, the CAPEX of 2009 will yield a rate of return on investment, well above Ginger Oil objective of 30 %.

“Our 2009 Drilling Plan has reached a total of eight wells drilled and completed. Ginger Oil had expected to reach twelve and I am not satisfied reaching eight. The 2009 program has increased our fourteen producing wells by five (to a total of nineteen) and we expect to increase our production by 40 % during the first quarter of 2010, compared to the fourth quarter of 2009”, says Don Neville, President of Ginger Oil Inc.

A detailed update on the drilling program 2009 will be presented in the company’s yearend report which is due to be published at 9 am on February 17th, 2010.

The year end report 2009 has been rescheduled and will be published on February 17th, instead of the February 27th as stated in the 2009 third quarter report.

The Annual General Meeting will be held in Stockholm on April 28, 2010. Venue will be announced in the year end report on February 17.

A shareholder in Ginger Oil AB, who wishes to use the right of initiative and submit an issue to the Annual General Meeting, must send a written request along with the issue to Ginger Oil AB, in due time for the company’s official notice to shareholders announcing the AGM. Please forward the initiative by mail to Ginger Oil AB, Attention: Magnus Stuart, Sveavägen 17, SE-111 57, Stockholm, or alternately by e-mail to mstuart@gingeroil.com.

The request must be received by the company not later than Wednesday March 10, 2010.